Weak sales persist in Calgary and beyond

Many Canadian energy-related municipalities within Alberta and Saskatchewan have seen housing markets struggle over the past few years, resulting in price declines.

The recent mortgage rule changes and higher lending rates are factors weighing on demand and prices across some of those areas.

“While our economy is no longer in a recession, persistently high unemployment rates, concerns over long-term growth, rising lending costs and stricter qualifications are all weighing on the housing demand,” said CREB® chief economist Ann-Marie Lurie.

“Growth in new listings is starting to ease for some property types, but it is not enough to prevent continued supply growth and, ultimately, an oversupplied housing market.”

“While our economy is no longer in a recession, persistently high unemployment rates, concerns over long-term growth, rising lending costs and stricter qualifications are all weighing on the housing demand.” – Ann-Marie Lurie, CREB® chief economist

Weak sales activity in Calgary continued into June, as residential sales for the month totaled 1,896 units. This is 11 per cent below last year and 12 per cent below long-term averages.

New listings continued to rise, with further inventory gains and months of supply now at 4.7 months.

High inventories in comparison to sales have generated more widespread buyers’ market conditions, causing downward pressure on prices. The city-wide benchmark price in June totaled $436,500. This is just below last month and 1.13 per cent below last year’s levels.

The detached segment of the market accounts for over 60 per cent of overall sales activity and makes up over 54 per cent of the inventory, with 4,817 units as of June. While sales have fallen and inventory has been rising across most price ranges, inventory levels for homes priced under $500,000 remain well below peak levels.

“In any market it’s extremely important to be well-informed, whether it’s about the process to get pre-approved for a mortgage or having the most up-to-date information about the prices in the community you are buying or selling in,” said CREB® president Tom Westcott.

HOUSING MARKET FACTS

Detached:

Detached sales eased while new listings rose across most districts in the city after the first half of the year, keeping inventories elevated.

The quarterly average months of supply increase compared to last year across all districts, keeping most areas in buyers’ market territory for the second quarter.

As of the second quarter, detached benchmark prices totaled $504,033. This is just above the previous quarter, but 0.41% below last year’s levels. North East, North, North West and South districts recorded year-over-year quarterly price declines. However, only the North East district saw prices slip further over level recorded in the first quarter of this year.

Apartment:

After the first half of the year, apartment sales totaled 1,396 units. This is nearly nine per cent below last year and 24 per cent below long-term averages. Easing sales were met with a decline in listings, helping to limit further growth in inventory levels. As of June, there were 1,872 apartment units in inventory, causing the months of supply to ease, averaging 6.8 months for the quarter.

While most areas of the city are struggling with oversupply, there does appear to be some improvements. While remaining far from long-term averages, In the second quarter the months of supply edged down over first quarter levels in the city Centre, North, North West, West, South and East districts.

The easing of the oversupply in most districts helped prevent further declines in quarterly benchmark prices. However, overall second quarter prices remain over three per cent below last year’s levels, and nearly 14 per cent below the quarterly high.

Semi-detached and row:

Year-to-date sales activity fell for both semi-detached and row product across most districts, but new listings remained similar to last year in the row sector, while increasing by 22 per cent for semi-detached property types. This resulted in stronger inventory gains in the semi-detached market and pushed up the quarterly months of supply to above five months

While row product did not see the same recent increase in inventory, gains in the previous quarters have not eased, causing the second quarter months of supply to total 5.47. This is similar to last quarter and above the second quarter of 2017 figure of 3.66.

Semi-detached and row benchmark prices averaged $419,000 and $301,833 in the second quarter. Row prices were nearly 2 per cent higher than the previous quarter and nearly three per cent above last year’s levels. Meanwhile, semi-detached prices were similar to the first quarter, but over two per cent below 2017 levels.

While some easing in the semi-detached market has occurred, quarterly prices are only two per cent below quarterly highs compared to the row sector which remains over 8 per cent below quarterly highs.

REGIONAL MARKET FACTS

Airdrie

Airdrie residential sales totalled 622 units in the first half of 2018. This is 11 per cent lower than the same period last year. Quarterly comparisons also show that Q2 2018 sales were 13 per cent lower than Q2 2017.

Year-to-date new listings rose just above last years levels, totalling 1,399 units, reaching a new high.

Total inventories in Airdrie averaged 531 units for the first half of 2018, almost 24 per cent higher than the first half of 2017. The rise in inventory combined with easing sales has caused months of supply to average over 5 months this year, impacting prices.

Detached benchmark prices have averaged $372,883 so far, this year. This is 1.05 per cent lower than the same period in 2017.

Cochrane

Residential sales in Cochrane decreased during the first half of 2018 by nearly ten per cent compared to the same period last year, but remain higher than long term averages and are comparable to 2016 levels.

However, new listings also continue to remain elevated, pushing inventory levels up to new record highs. Overall months of supply have averaged over 6 months this year, above long-term averages.

Despite some of the gains in months of supply, detached benchmark prices in Cochrane have remain relatively stable. Year-to-date detached prices averaged $424,467 similar to levels recorded last year but over four per cent below recent highs.

Okotoks

Total residential sales in Okotoks totalled 267 units during the first six months of 2018. This is 13 per cent below last year’s levels and below long-term trends. Meanwhile, new listings remain elevated, keeping inventories near record levels.

While months of supply remain higher than last years levels, detached prices have managed to post a modest gain, with the benchmark price averaging $436,000 this year, one per cent higher than last year, but three per cent below previous highs.